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Abstract

To date, African states have been called before 62 tribunals of the International Centre for the Settlement of Investment Disputes (ICSID); 26 cases are pending. Recently, foreign investors have invoked Bilateral Investment Treaty provisions to challenge legislation aimed at addressing historical inequalities in the distribution of natural resources in Southern Africa (Funnekotter, Piero Foresti, Border Timbers). This tension between the right to property as international investment law’s origin and other rights protected by national regulation raises the question of applicable law in investor-state arbitration. The principle of “systemic integration” expressed in the Vienna Convention on the Law of Treaties requires arbitrators to have regard for the disputing parties’ other relevant obligations under international law, including human rights. Such considerations are often paramount to the determination of whether expropriations are arbitrary, discriminatory, or pursued in good faith for a public purpose. In practice, however, decisions by ICSID tribunals are far from consistent in this respect. Attempts to address this through submissions made by non-disputing parties acting as amicus curiae have produced mixed results (Biwater, Border Timbers). As questions remain concerning the harmonisation of these parallel regimes, an environment of legal uncertainty is emerging which impacts negatively on local populations and investors, both current and potential. This paper argues that since the admission of the EU Commission as amicus curiae in AES v. Hungary, the door has opened for regional organisations like the Southern African Development Community to participate actively in ICSID arbitrations. This may provide an enhanced opportunity to counteract the effects of a legal regime that promotes economic and political subordination to investors and investor-states, by introducing into investment law a perspective that reflects the particular circumstances of post-colonial economies.

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The jurisprudence of arbitral tribunals provides fertile ground to identify what J.T. Gathii identifies as Regime Bias: this approach traces adverse outcomes for Third World countries in the way in which the “rules of international trade, commerce and investment are crafted, applied and adjudicated between Third World and developed countries or between Third World countries and the interests of international capital.” See J.T. Gathii, “Third World Approaches to International Economic Governance”, in R. Falk, B. Rajagopal and J. Stevens (eds.), International Law and the Third World: Reshaping Justice (London: Routledge-Cavendish, 2008), p. 261 et seq.

A. Anghie, Imperialism, Sovereignty and the Making of International Law (Cambridge: Cambridge University Press, 2005); J.T. Gathii, War, Commerce and International Law (Oxford: Oxford University Press, 2010); G. Van Harten, Five Justifications for Investment Treaties: A Critical Discussion, 2 Trade Law & Development, no. 1 (2010); M. Bedjaoui Towards a New International Economic Order (Paris: Holmes & Meier, 1979); M. Sornarajah, Mutations of Neo-Liberalism in International Investment Law, 3 Trade Law & Development, no. 206 (2011); M. Sornarajah, The International Law on Foreign Investment (Cambridge: Cambridge University Press, 2010).

Among others, the International Law Commission and the International Chamber of Commerce developed draft multilateral agreements and proposals were put before the Organisation for European Economic Cooperation. None were adopted. Vandevelde (2010), supra note 14, pp. 53-54.

Despite massive Chinese investment in Africa not one reported claim has been initiated under ICSID by a Chinese investor (Daele and Reya (2012), Ibid.) Gathii notes that frequent critical accounts of Chinese investment in Africa have “tended to privilege seeing Africa’s external relations from the perspective of a continent that must necessarily pursue relations based on a particular development model promoted by Western donors, that the Chinese do not buy into.” See J.T. Gathii, African Regional Trade Agreements as Legal Regimes (Cambridge: Cambridge University Press, 2011), p. 366; see also F. Crouigneau and R. Hiault, Wolfowitz slams China banks on Africa lending, available at: <www.ft.com/cms/s/0/45e594e0-62fc-11db-8faa-0000779e2340.html#axzz2I9qnXTqD>, accessed 1 February 2013.

Such is implicit in the language of classic BITs. The United Kingdom, for example, concluded BITs with, inter alia, Cameroon (1982), South Africa (1994), Zimbabwe (1995), Côte d’Ivoire (1995) and Kenya (1999). Each BIT is entitled “Agreement for the Promotion and Protection of Investments”, accords the UK (the capital-exporting state) first priority of named contracting parties and is couched in identical terminology. The UK advocated the creation of these treaties and in doing so articulated what would be the benefit of signing (and the disadvantage of not signing) to potential treaty partners. A comprehensive database of BITs is available at: <www.unctad.org/en/pages/DIAE/International%20Investment%20Agreements%20%28IIA%29/IIA-Tools.aspx>, accessed 14 February 2013. See also R. Dolzer, The Impact of International Investment Treaties on Domestic Administrative Law, 37 Journal of International Law & Politics (2005), 254-255.

Anghie details how, in Vitoria’s juridical texts, “an apparently benevolent approach of including the aberrant Indian within a universal order is then a basis for sanctioning and transforming the Indian.” Anghie (2006), supra note 11, pp. 741, 744.

UNCTAD, supra note 23. By the end of 2011, UNCTAD report that “the IIA universe consisted of more than 3,100 agreements, including more than 2,860 BITs and 330 ‘other IIAs’ (e.g. free trade agreements or economic partnership agreements with investment provisions).”

Although Article 26 of the ICSID Convention permits states to reserve right to impose such a requirement, in practice few states have done so. Notably Guatemala notified ICSID in 2003 that it intended this to be a condition of consent to arbitration under the Convention. See P. Muchlinski, “Corporate Social Responsibility”, in P. Muchlinski (ed.), The Oxford Handbook of International Law (Oxford: Oxford University Press, 2008), p. 1026.

T. Waelde and S. Dow, Treaties and Regulatory Risk in Infrastructure Investment: The Effectiveness of International Law Disciplines versus Sanctions by Global Markets in Reducing the Political and Regulatory Risk for Private Infrastructure Investment, 34 Journal of World Trade, no. 2 (2000), 45.

W. Burke-White and A. von Staden, “The Need for Public Law Standards of Review in Investor-State Arbitrations”, in S. Schill (ed.), International Investment Law and Comparative Public Law (Oxford: Oxford University Press, 2010), p. 691; G. Van Harten and M. Loughlin, Investment Treaty Arbitration as a Species of Global Administrative Law, 17 European Journal of International Law, no. 1 (2006), 121-150.

B. Kingsbury and S. Schill, Investor-State Arbitration as Governance: Fair and Equitable Treatment, Proportionality and the Emerging Global Administrative Law (New York University School of Law, Public Law & Legal Theory Research Paper Series, Working Paper No. 09-46, 2009), p. 50, available at: <www.ssrn.com>.

Ibid.

C.N. Brower, A Crisis of Legitimacy, National Law Journal (7 October 2002), p. 1.

Recently, the energy company Vattenfall brought two ICSID cases against Germany. In 2009, Vattenfall sought over €1billion in damages from Germany for the imposition of stricter environmental regulations on its coal-fired power plant. A second case continues challenging Germany’s nuclear phase-out policy. Greenpeace unsuccessfully attempted to use Germany’s OECD National Contact Point to challenge Vattenfall’s first ICSID complaint, claiming that the complaint undermined German environmental law. See N. Bernasconi-Osterwalder and R.T. Hoffmann, The German Nuclear Phase-Out Put to the Test in International Investment Arbitration? Background to the New Dispute Vattenfall v. Germany (II) (IISD, 2012); Beschwerde nach den OECD Leitsätzen für multinationale Unternehmen gegen die Gesellschaften Vattenfall AB et al., October 2009, p. 12, available at: <www.oecdwatch.org/cases/Case_170>, accessed 1 February 2013.

Suez, Sociedad General de Aguas de Barcelona S.A. and Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/03/19, Order in Response to Petition for Transparency and Participation as Amicus Curiae, 19 May 2005.

For a comprehensive list of cases featuring amicus petitions, see K. Fach-Gomez, Rethinking the Role of Amicus Curiae in International Investment Arbitration: How to Draw the Line Favourably for the Public Interest, 35 Fordham International Law Journal (2011–2012), 510-564.

See the analysis of the relevant norms in Biwater, ICSID Case No. ARB/05/22, Procedural Order No. 3, 29 September 2006, paras. 121-132. The tribunal discusses whether the parties are free to publicize different arbitral documents. Also see C. Knahr and A. Reinisch, Transparency versus Confidentiality in International Investment Arbitration – The Biwater Gauff Compromise, 6 The Law and Practice of International Courts and Tribunals (2007), 97-118.

Ibid, para. 121. In Methanex access to documents was denied as there was a specific agreement by the parties not to disclose information. Methanex, supra note 69, para. 46.

L.E. Peterson, IA Reporter, Analysis: Tribunal’s Reading of Amicus Curiae Tests Could Make Life Difficult for Antagonistic Amici – and Those Seeking to Raise Novel Concerns Such as Human Right Law, available at: <http://www.iareporter.com/articles/20120628>, accessed 1 December 2012.

Centre for International Environmental Law, Amicus Brief Highlights the Environmental and Human Rights Impacts of Mining in $77 Million Investment Arbitration Case, available at: <http://www.ciel.org/HR_Envir/PAC_RIM_4Mar11.html>, accessed 1 February 2013.

Vienna Convention on the Law of Treaties, 1155 U.N.T.S. 331, Article 31.(3) (c); See B. Simma and T. Kill, “Harmonizing Investment Protection and International Human Rights: First Steps Towards a Methodology”, in C. Binder et al. (eds.), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford: Oxford University Press, 2009), 678-707.

B. Simma, Foreign Investment Arbitration: A Place For Human Rights? 60 International and Comparative Law Quarterly, no. 3 (2011), 573-596, at 584.

M. Koskenniemi, Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law, Report of the Study Group of the International Law Commission, UN-Doc. A/CN.4/L.682, 13 April 2006, paras. 410-480.

O. De Schutter, Confronting the Global Food Challenge: A Human Rights Approach to Trade and Investment Policies, paper given at the conference “Confronting the global food challenge: finding new approaches to trade and investment that support the right to food” (Geneva, Switzerland, 24–26 November 2008), p. 19.

Koskenniemi (2006), supra note 120, para. 480.

Vienna Convention on the Law of Treaties, supra note 117, Article 60(5).

Charter of the United Nations, 1 U.N.T.S. XVI, Articles 1(3) and 55 and 103.

Agreement between the United Kingdom of Great Britain and Northern Ireland and the United Republic of Tanzania for the Promotion and Protection of Investments, signed at Dar es Salaam 7 January 1994, entered into force 2 August 1996.

International Covenant on Economic, Social and Cultural Rights, 993 U.N.T.S. 3.

African Charter on the Rights and Welfare of the Child, OAU Doc. CAB/LEG/24.9/49 (1990), Art. 14 (2) (c); Convention on the Elimination of all Forms of Discrimination against Women, 1249 U.N.T.S. 13, Art. 14 (2) (h); Convention on the Rights of the Child, 1577 U.N.T.S. 3, Art. 24 (2) (c).

Committee on Economic, Social and Cultural Rights (CESCR), General Comment No. 15, The right to water (arts. 11 and 12 of the ICESCR, UN-Doc. E/C.12/2002/11), paras. 12, 17.

Ibid, para. 24; C. de Albuquerque, Report of the Independent Expert on the Issue of Human Rights Obligations Related to Access to Safe Drinking Water and Sanitation, UN-Doc. A/HRC/15/31, 29 June 2010, para. 21.

Agreement between the government of the Republic of South Africa and the government of the Italian Republic for the Promotion and Protection of Investments, signed in Rome 9 June 1997, entered into force 16 March 1999; Agreement between the Republic of South Africa and the Belgo-Luxembourg Economic Union on the Reciprocal Promotion and Protection of Investments, signed in Pretoria 14 August 1998, entered into force 14 March 2003.

Mineral and Petroleum Resources Development Act, No. 28 of 2002, 448 Government Gazette, no. 23922 (October 2002), Preamble, paras. 5-7: “Reaffirming the State’s commitment to reform to bring about equitable access to South Africa’s mineral and petroleum resources; Being committed to eradicating all forms of discriminatory practices in the mineral and petroleum industries; Considering the State’s obligation under the Constitution to take legislative and other measures to redress the results of past racial discrimination.”

International Convention on the Elimination of All Forms of Racial Discrimination, 660 U.N.T.S. 195, Art 1 (4) and 2 (2), ratified by South Africa 10 December 1998.

International Law Commission, Responsibility of States for Internationally Wrongful Acts, Report of the International Law Commission on its Fifty-Third Session, UN-G.A. Official Records, Fifty-Sixth Session, Supp. No. 10 A/56/10, pp. 208 and 283.

African Commission on Human and Peoples Rights, The Social and Economic Rights Action Center and the Center for Economic and Social Rights v. Nigeria (Ogoni), Communication No. 155/96, para. 64; African Commission on Human and Peoples’ Rights, Centre for Minority Rights Development (Kenya) and Minority Rights Group International on Behalf of Endorois Welfare Council v. Kenya, Communication No. 276/2003, paras. 187, 196.

Ogoni, supra note 165, paras. 63, 69.

Endorois, supra note 165, paras. 186-191, 199-204.

Guiding Principles on Business and Human Rights, supra note 8, Principles 17, 12, 18 and Commentary; OECD Guidelines, supra note 64, Part. I, Chap. IV and Commentary. This is also highlighted in 2012 the United Nations Permanent Forum on Indigenous Issues, Analysis of the duty of the State to protect indigenous peoples affected by transnational corporations and other business enterprises (2012), UN-Doc. E/C.19/2012/3, para. 21.

“Border Timbers Limited was incorporated in 1979 through an amalgamation of three companies namely Border Eastern Forest Estates, Renfee Timbers (Pvt) Limited and Forestry Management Services. Forestry Management Services had taken over plantations that were first established in Imbeza by the British South African Police Company (BSAP co) [sic] in 1924. The BSAP Company increased plantings substantially in 1946 after the Second World War to include the Chimanimani area.” Information from Border Timbers Limited, available at: <http://www.bordertimbers.com/about_us.html>, accessed 1 December 2012.

The Government of the Republic of Zimbabwe v Karel Fick and others, Constitutional Court of South Africa, Case CCT 101/12. Documents available at: <http://www.constitutionalcourt.org.za>, accessed 27 May 2013.